CLIENT CASE STUDY

Shell: First-in-Industry 4PL logistics solution

Shell collaborated with Accenture to achieve a step change in its logistics performance through the design and implementation of a 4PL logistics solution.

Overview

Shell is one of the largest companies in the world. Comprising a global group of energy and petrochemical companies, Shell is active in every area of the oil and gas industry, including exploration and production, downstream manufacturing, and distribution and marketing. Headquartered in the Netherlands, Shell operates in more than 70 countries and territories and employs approximately 92,000 people. In 2013, Shell reported revenues of approximately US$451 billion.

Opportunity

The growth and diversity of Shell’s upstream business activities created challenges that required a new logistics management solution. Specifically:

The growth of the Unconventional Gas business led to more intensive demand for materials and road transportation.

The fast-paced, volatile and intensive nature of the materials requirements in unconventional gas operations had increased the risk of operation disruption and safety hazard exposure related to logistics, thereby driving the need for better demand visibility, enhanced planning and reporting capabilities, and greater contractor oversight in logistics. Having these elements in place could better assure full logistics support to the business.

Complex projects often included parallel logistics networks operated by multiple contractors that could potentially foster an environment of sub-optimal performance.

A shortage of skilled logisticians and logistics systems had led to a limited end-to-end logistics management capability.

Together, these challenges resulted in value leakage for Shell in the form of lost operational synergy, rising transportation costs, and greater potential for project delays due to the unavailability of materials and higher safety exposure. The company recognized that it needed to move to a more integrated supply chain management approach to drive a step change in its logistics capability and performance.

Solution

As the scope of this project was to design and implement a new logistics operating model to support Shell's upstream operations, covering production, wells and projects, Shell engaged Accenture to help design a logistics solution that involved the use of a 4PL provider to plan and manage Shell's logistics activities. 4PL is a fourth-party logistics service provider and asset free logistics management partner that helps to optimize and manage traditional 3PL (3rd party logistics) execution partners.

Accenture worked closely with Shell throughout the strategy development to design an approach that was fit-for-purpose for Shell and could adapt to the local requirements of the different business units. Accenture conducted detailed analyses of current logistics operations and shared leading-class 4PL practices and external sector perspectives to help shape Shell’s global vision. The 4PL solution became known as “Logistics Management Services” (LMS) within Shell. Shell adopted the LMS term to highlight key distinctions from traditional 4PL and to define a solution that was dedicated to Shell and based on a model that allowed Shell to retain close control of the outsource provider. Further, the solution was focused on building long-term strategic relationships, positioning Shell to access

the 4PL provider’s best people, leading innovations and best technology. The single client platform enabled a Shell-tailored solution with dedicated focus.

Following the strategy development phase, a number of pilots were implemented to test and refine the new 4PL solution. Accenture worked closely with Shell through the pilots, conducting initial logistics management assessments, supporting supplier selection, and driving the co-creation of the solution design with the 4PL suppliers. This ensured that the 4PL solution was appropriate and tailored to meet Shell’s local business challenges.

Once the pilots had been successfully implemented, Accenture helped train the Shell LMS team and moved into a supporting role for subsequent 4PL assessments and implementations. As the number of deployments grew, Accenture helped Shell to define the long-term systems and category strategies before handing them over to the newly established LMS category and global logistics discipline teams. LMS is now an established part of the Shell logistics strategy.

Results

With Accenture’s support, Shell developed, embedded and matured its 4PL logistics strategy to achieve the following benefits:

Improved service levels, minimized asset down time due to the non-availability of materials, and reduced supply chain risks to the business.

Reduced safety exposure due to better planning, resulting in fewer trips and lifts.

Improved logistics cost and performance visibility, and the implementation of better reporting and an enhanced analytics capability to assist Shell in making faster and smarter decisions.

The leveraging of external logistics specialists to bring skilled resources, industry-leading logistics practices and technologies to Shell, while providing the flexibility to meet changes in business demand.

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